Question

In a perfectly competitive​ market, sellers​ _________ and buyers​ _________.

a. are able to charge more than the market​ price; are able to pay less than the market price.
b. cannot charge more than the market​ price; cannot pay less than the market price.
c. cannot charge more than the market​ price; are able to pay less than the market price.
d. are able to charge more than the market​ price; cannot pay less than the market price.

Answer 1

The answer is B. In a perfectly competitive market, the sellers and buyers are in equal positions of power. As a result, if a seller were to charge more than market price, the buyer could easily choose not to buy from that seller and instead find another seller that is selling at market price. It is vice versa if the buyer were to ask for a price below market price, the seller can easily find another buyer.